Accessible Version

China's Footprints on the Global Economy: Remarks delivered at the Second IMF and Federal Reserve Bank of Atlanta Research Workshop on the Chinese Economy, Accessible Data

Slide 1: China's Rise, Double-digit growth for several decades

Real GDP Growth

Year Percent Change
1979 7.6
1980 7.81
1981 5.17
1982 8.93
1983 10.84
1984 15.14
1985 13.44
1986 8.94
1987 11.69
1988 11.24
1989 4.19
1990 3.91
1991 9.29
1992 14.22
1993 13.87
1994 13.05
1995 10.95
1996 9.93
1997 9.23
1998 7.84
1999 7.67
2000 8.49
2001 8.34
2002 9.13
2003 10.04
2004 10.11
2005 11.4
2006 12.72
2007 14.23
2008 9.65
2009 9.4
2010 10.64
2011 9.54
2012 7.86
2013 7.76
2014 7.3
2015 6.9
2016 6.7

This line graph also includes two horizontal lines denoting periodic averages. The average from 1979 to 2011 was 10%, and the line from average from 2012 to 2016 was 7.3%.

Source: Haver Analytics

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Slide 2: China's Rise, Increased economic welfare

Growth of Real Per Capita Consumption*

>
Year Percentage
1985-1994 6.11
1995-2001 8.15
2002-2008 9.03
2009-2015 9.54

*Private Consumption Only

Source: Haver Analytics

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Slide 3: China's Rise, Strong export growth supported by export-led investment

Investment and Export Growth*

Correlation = 0.6 or correlation = 0.7 excluding 2009-2010

Percent change
Year Export Growth* Investment Growth
1994 41.4 26.19
1995 27.28 22.22
1996 18.05 13.2
1997 20.8 5.12
1998 6.85 4.94
1999 3.44 4.17
2000 28.78 9.03
2001 6.8 16.95
2002 23.14 11.77
2003 38.31 23.72
2004 36.86 24.33
2005 28 11.69
2006 29.18 15.85
2007 26.06 24.74
2008 19.3 23.38
2009 -16.51 17.27
2010 31.87 21.3
2011 21.62 18.65
2012 9.17 9.39
2013 8.87 10.51
2014 4.43 7.32
2015 -4.5 3.34
2016 -7.15 5.4

*Nominal, exports are on a balance-of-payments basis

Source: Haver Analytics

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Slide 4: China's Rise, Exports outpaced imports; buildup of large current account surplus

Savings and investment, as a percent of GDP

Year National Savings Investment Current Account
2000 36.01 34.33 1.69
2001 37.59 36.3 1.3
2002 39.31 36.9 2.41
2003 42.96 40.37 2.59
2004 46.18 42.66 3.53
2005 46.77 40.98 5.78
2006 49.02 40.61 8.41
2007 51.16 41.24 9.92
2008 52.34 43.21 9.13
2009 51.09 46.33 4.76
2010 51.77 47.88 3.89
2011 49.8 48.01 1.8
2012 49.69 47.18 2.51
2013 48.78 47.25 1.53
2014 49.03 46.77 2.26
2015 47.52 44.75 2.78
2016 45.94 44.18 1.75

Source: Haver Analytics

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Slide 5: China's Rise, Lower consumption share of GDP than other EMEs

Consumption as a share of GDP (percent)*

Year India South Korea China
1995 75.64 61.67 58.82
1996 76.29 63.32 59.76
1997 76.37 63.33 59.37
1998 77.19 61.67 60.2
1999 77.67 63.47 62.34
2000 77.16 65.09 63.3
2001 77.38 66.94 61.61
2002 75.77 67.67 60.57
2003 73.77 66.09 57.49
2004 70.08 64.16 54.74
2005 69.16 65.49 53.62
2006 67.99 66.6 51.86
2007 67.25 66.31 50.14
2008 68.64 67.07 49.22
2009 69.14 66.82 49.37
2010 67.45 64.79 48.45
2011 67.29 65.55 49.59
2012 67.14 66.2 50.11
2013 67.94 65.92 50.31
2014 68.55 65.47 50.73
2015 68.29 64.32 51.82
2016 70.44 63.97 53.62

*Includes government consumption

Source: Haver Analytics

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Slide 6: China's Rise: Spillovers, China: Endpoint of a giant Asian supply chain

China*: Imports of Parts and Components, percent of total manufactured imports

Year China's imports from the world China's imports from Asia ex. China/Hong Kong China's imports from the rest of the world
1995 58.47 66.04 46.53
2005 65.41 70.36 55.11
2015 45.47 58.79 34.89

*Includes Hong Kong

Source: FRB staff estimated based on United Nations Comtrade data

Updated using the methodology of Haltmaier et. al (2007). Asia ex. China includes following selection in Comtrade: India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Thailand, Vietnam, and Other Asia

China*: Exports of parts and components, percent of total manufactured exports

Year China's exports to the world China's exports to Asia ex. China/Hong Kong China's exports to the rest of the world
1995 26.05 42.4 18.6
2005 31.23 47.91 24.58
2015 30.96 42.47 26.6

*Includes Hong Kong

Source: FRB staff estimated based on United Nations Comtrade data

Updated using the methodology of Haltmaier et. al (2007). Asia ex. China includes following selection in Comtrade: India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Thailand, Vietnam, and Other Asia

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Slide 7: China's Rise: Spillovers, China's voracious appetite for commodities

China's Share of Global Commodity Consumption (percent)

Commodity 2000 2010 2015
Oil 6.014704 10.22286 12.15466
Copper 12.38286 38.17301 49.72966
Steel 16.38233 43.40805 43.3167
Coal 29.47557 47.9703 50.01226

Source: oil from International Energy Association, copper from Bloomberg, steel from Worldsteel Association's Steel Statistical Yearbook 2016, and coal from BP Statistical Review of World Energy, June 2016.

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Slide 8: China's Rise: Spillovers, Double-digit share of world trade now

China's Share of World Trade (Percent)

Year China's Percentage Share of World Trade Annually
1994 2.733751
1995 2.617493
1996 2.621481
1997 2.518259
1998 2.521346
1999 2.855543
2000 3.422679
2001 3.82006
2002 4.458119
2003 5.355011
2004 5.964907
2005 6.165085
2006 6.430702
2007 6.752016
2008 6.922338
2009 7.982269
2010 9.127047
2011 9.555748
2012 9.940325
2013 10.49806
2014 10.4716
2015 9.737794
2016 " NA"

Source: IMF

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Slide 9: China's Rise: Spillovers, China + other EMEs now account for more than 1/2 of world GDP

Share of World GDP* (Percent)

Year Advanced Foreign Economies United States China EMEs ex. China
2000 36.88 24.91 8.96 29.25
2001 36.68 24.58 9.48 29.25
2002 36.19 24.41 10.09 29.31
2003 35.36 24.22 10.71 29.7
2004 34.52 23.98 11.25 30.25
2005 33.68 23.7 11.98 30.63
2006 32.93 23.17 12.85 31.05
2007 32.11 22.41 13.95 31.53
2008 31.32 21.77 14.9 32.01
2009 30.16 21.29 16.36 32.2
2010 29.39 20.7 17.16 32.74
2011 28.65 20.21 18.06 33.09
2012 27.81 19.99 18.85 33.35
2013 27.14 19.68 19.68 33.51
2014 26.6 19.48 20.41 33.51
2015 26.22 19.34 21.12 33.32
2016 25.88 19.09 21.89 33.15

*IMF PPP weights

Source: IMF

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Slide 10: China's Rise: Spillovers, Declining import content in Chinese exports. . .

China's Processing Trade (Percent of Total)

Year Domestic Content of Processing Exports* Processing Exports Non-Processing Exports
2000 32.52113 55.13596 44.86405
2001 36.27481 55.38941 44.61059
2002 32.10109 55.20511 44.79489
2003 32.41308 55.05597 44.94403
2004 31.90179 55.30324 44.69676
2005 34.06493 54.50963 45.49037
2006 36.62601 52.74601 47.25399
2007 40.22436 50.70818 49.29182
2008 44.04381 47.37264 52.62736
2009 45.50708 48.8438 51.15621
2010 43.46894 46.95002 53.04998
2011 43.68877 44.17072 55.82928
2012 44.26469 42.35522 57.64479
2013 42.32706 38.93113 61.06888
2014 40.53878 37.92948 62.07052
2015 43.91789 35.21609 64.78391
2016 44.6286 34.14877 65.85123

*Processing exports less processing imports, expressed as a percent of processing exports.

Source: Haver Analytics, FRB staff estimates

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Slide 11: China's Rise: Spillovers, . . .Is reflected also in the changing nature of Chinese imports

China's Imports

Year Quarter Processing Non-Processing
2000 Q1 41.50125 58.49875
2000 Q2 41.37119 58.62881
2000 Q3 40.70621 59.29379
2000 Q4 40.12435 59.87565
2001 Q1 37.91564 62.08437
2001 Q2 37.4497 62.5503
2001 Q3 37.09097 62.90903
2001 Q4 41.29755 58.70245
2002 Q1 41.94815 58.05185
2002 Q2 41.62073 58.37927
2002 Q3 41.0309 58.9691
2002 Q4 40.68696 59.31304
2003 Q1 37.902 62.098
2003 Q2 38.8473 61.1527
2003 Q3 39.42644 60.57357
2003 Q4 40.78786 59.21214
2004 Q1 37.64809 62.35191
2004 Q2 38.84429 61.15572
2004 Q3 40.22437 59.77563
2004 Q4 40.45788 59.54212
2005 Q1 41.34013 58.65987
2005 Q2 41.51731 58.48269
2005 Q3 41.53404 58.46596
2005 Q4 41.28044 58.71956
2006 Q1 42.07093 57.92907
2006 Q2 40.75275 59.24725
2006 Q3 39.90462 60.09538
2006 Q4 39.89515 60.10486
2007 Q1 39.64788 60.35212
2007 Q2 38.87575 61.12425
2007 Q3 38.76546 61.23454
2007 Q4 37.24717 62.75283
2008 Q1 34.74088 65.25912
2008 Q2 33.44181 66.55819
2008 Q3 32.57756 67.42244
2008 Q4 33.29865 66.70135
2009 Q1 32.27628 67.72372
2009 Q2 31.43348 68.56652
2009 Q3 31.92622 68.07378
2009 Q4 32.0857 67.9143
2010 Q1 30.6788 69.3212
2010 Q2 30.97399 69.02601
2010 Q3 30.00571 69.99429
2010 Q4 28.18074 71.81926
2011 Q1 27.97919 72.02081
2011 Q2 28.06902 71.93098
2011 Q3 26.68231 73.31769
2011 Q4 25.33283 74.66717
2012 Q1 26.31693 73.68307
2012 Q2 26.51555 73.48445
2012 Q3 26.73908 73.26092
2012 Q4 26.11549 73.88451
2013 Q1 26.78362 73.21638
2013 Q2 25.40435 74.59565
2013 Q3 25.12338 74.87662
2013 Q4 24.77758 75.22242
2014 Q1 24.59399 75.40601
2014 Q2 26.42428 73.57572
2014 Q3 27.89566 72.10434
2014 Q4 28.01842 71.98158
2015 Q1 27.33948 72.66052
2015 Q2 26.85353 73.14647
2015 Q3 26.36107 73.63893
2015 Q4 26.31466 73.68534
2016 Q1 26.03708 73.96292
2016 Q2 24.62822 75.37178
2016 Q3 25.39123 74.60877
2016 Q4 24.25078 75.74923
2017 Q1 23.54345 76.45655
2017 Q2 24.07628 75.92372
2017 Q3 " NA" " NA"
2017 Q4 " NA" " NA"

Source: Haver Analytics and FRB staff estimates

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Slide 12: China's Rise: Spillovers, Rising share of consumption goods in imports but from low base

China Imports from World* (Billions of USD)

Year Consumption Goods Capital Goods Intermediate Goods Residual
2005 21.72 128.05 493 17.18
2006 26.08 151.64 589.16 24.58
2007 33.63 174.31 719.11 29.07
2008 38.8 191.57 853.39 48.8
2009 38.24 168.62 763.94 35.12
2010 49.86 226.08 1050.21 70.1
2011 67.18 261.06 1291.72 123.52
2012 79.12 257 1334.58 147.71
2013 90.16 256.78 1418.49 184.56
2014 96.88 264.05 1430 168.3
2015 103.27 242.23 1196.56 137.5

*Imports are classified into consumption, capital, and intermediate goods according to the UN Broad Economic Categories Classification System (rev. 4). Consumption goods include the following: primary and processed food and beverages for household consumption, non-industrial transport equipment and parts and accessories, and durable and semi- and non-durable consumer goods not elsewhere specified.

Source: United Nations Comtrade

China's Consumption Imports

Year Percent of Total Imports
2005 3.29
2006 3.3
2007 3.52
2008 3.43
2009 3.8
2010 3.57
2011 3.85
2012 4.35
2013 4.62
2014 4.94
2015 6.15

Source: United Nations Comtrade and Haver Analytics

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Slide 13: China's Rise: Spillovers, Services Imports: Strong Rise in Tourism

Travel Imports: 2015, Billions of USD

Countries Travel Imports: 2015, Billions of USD
China202.2
United States 112.87
Germany 76.28
France 38.41
Russia 34.93
Canada 29.51
South Korea 24.96
Italy 24.72
Australia 23.45
Hong Kong 23.06
Singapore 22.06

*Adjusted for disguised capital outflows (Wong, 2017)

Source: UN World Tourism Organization, FRB Staff Estimate

China's Travel Imports*, Percent of Global Tourism Spending

Year Percent
1995 0.97
1996 1.12
1997 2.03
1998 2.27
1999 2.61
2000 3.02
2001 3.26
2002 3.43
2003 3.03
2004 3.27
2005 3.38
2006 3.57
2007 3.8
2008 4.24
2009 5.69
2010 6.61
2011 7.88
2012 10.46
2013 12.28
2014 14.2
2015 18.62

*Adjusted for underreporting before 2013 and disguised capital outflows since 2013 (Wong, 2017)

Source: UN World Tourism Organization, FRB Staff Estimate

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Slide 14: China's Rise: Spillovers, Effect of 3 percent China real GDP shock: Full sample

 

Effect of China Shock* on China Growth (Deviation from baseline, percent), 1979:Q4-2011:Q2

Quarter Impulse Response Lower Bound 50% Confidence Band Upper Bound 50% Confidence Band
0 2.57 2.12 3.06
1 2.85 2.34 3.61
2 3.32 2.61 4.3
3 3.7 2.71 4.9
4 4.13 2.87 5.51
5 4.42 3.07 6.16
6 4.74 3.21 6.73
7 5.02 3.32 7.3
8 5.28 3.39 7.87

*3 percent shock

Source: FRB Staff Estimates

Effect of China Shock* on other EME Growth (Deviation from baseline, percent), 1979Q4-2011:Q2

Quarter Impulse Response Lower Bound 50% Confidence Band Upper Bound 50% Confidence Band
0 0.25 -0.26 0.76
1 0.28 -0.38 0.95
2 0.43 -0.42 1.33
3 0.51 -0.51 1.64
4 0.67 -0.5 1.96
5 0.87 -0.46 2.34
6 1.09 -0.38 2.78
7 1.3 -0.3 3.24
8 1.53 -0.2 3.71

*3 percent shock

Source: FRB Staff Estimates

Effect of China Shock* on China Growth (Deviation from baseline, percent), 1980:Q1 - 2016:Q4

Quarter Impulse Response Lower Bound 50% Confidence Band Upper Bound 50% Confidence Band
0 3 2.71 3.29
1 3.54 2.9 4.18
2 3.5 2.52 4.48
3 3.6 2.3 4.91
4 5.53 3.83 7.24
5 6.09 3.99 8.23
6 6 3.5 8.55
7 6.05 3.15 9.01
8 7.19 3.86 10.61

*3 percent shock

Source: FRB Staff Estimates

Effect of China Shock* on other EME Growth (Deviation from baseline, percent), 1980:Q1 - 2016:Q4

Quarter Impulse Response Lower Bound 50% Confidence Band Upper Bound 50% Confidence Band
0 0.17 -0.16 0.51
1 0.3 -0.34 0.95
2 0.25 -0.69 1.18
3 0.74 -0.49 1.97
4 0.95 -0.57 2.47
5 1.01 -0.73 2.78
6 1.07 -0.87 3.04
7 1.31 -0.82 3.47
8 1.41 -0.9 3.77

*3 percent shock

Source: FRB Staff Estimates

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Slide 15: China's Rise: Spillovers, Effect of 3 percent China real GDP shock: Simple VAR

Effect of China Shock* on China Growth (Deviation from baseline, percent), 1980:Q1-2005:Q4

Quarter Impulse Response Lower Bound 50% Confidence Band Upper Bound 50% Confidence Band
0 3 2.65 3.35
1 3.3 2.56 4.03
2 3.15 2.04 4.26
3 3.28 1.8 4.77
4 5.33 3.4 7.28
5 5.66 3.24 8.12
6 5.41 2.52 8.35
7 5.42 2.06 8.87
8 6.64 2.75 10.66

*3 percent shock

Source: FRB Staff Estimates

Effect of China Shock* on other EME Growth (Deviation from baseline, percent), 1980:Q1-2005:Q4

Quarter Impulse Response Lower Bound 50% Confidence Band Upper Bound 50% Confidence Band
0 -0.06 -0.46 0.33
1 -0.22 -0.93 0.49
2 -0.47 -1.47 0.54
3 -0.1 -1.42 1.22
4 0.02 -1.59 1.64
5 -0.01 -1.86 1.86
6 -0.02 -2.09 2.08
7 0.21 -2.08 2.54
8 0.31 -2.2 2.87

*3 percent shock

Source: FRB Staff Estimates

Effect of China Shock* on China Growth (Deviation from baseline, percent), 2006:Q1 - 2016:Q4

Quarter Impulse Response Lower Bound 50% Confidence Band Upper Bound 50% Confidence Band
0 3 2.48 3.52
1 5.4 4.19 6.62
2 7.11 5.07 9.17
3 8.2 5.31 11.15
4 8.82 5.13 12.59
5 9.11 4.74 13.62
6 9.19 4.25 14.32
7 9.17 3.77 14.79
8 9.09 3.34 15.1

*3 percent shock

Source: FRB Staff Estimates

Effect of China Shock* on other EME Growth (Deviation from baseline, percent), 2006:Q1 - 2016:Q4

Quarter Impulse Response Lower Bound 50% Confidence Band Upper Bound 50% Confidence Band
0 1.14 0.48 1.8
1 3.01 1.62 4.4
2 4.78 2.49 7.1
3 6.18 2.96 9.46
4 7.17 3.12 11.33
5 7.8 3.06 12.71
6 8.16 2.85 13.68
7 8.33 2.58 14.33
8 8.38 2.29 14.77

*3 percent shock

Source: FRB Staff Estimates

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Slide 16: China at a Crossroads: Risks, Overinvestment and excess capacity

Contributions to Investment Growth (percentage points)

Dates (annual) Manufacturing Real estate Infrastructure Other
2009 9.2 5.7 11 5.1
2010 8.9 7.7 5.2 2.6
2011 12.5 7.9 0.7 3.9
2012 7.8 5.8 3.2 4
2013 6.6 5.1 4.8 3.2
2014 4.5 3 4.3 3.3
2015 2.3 0.7 3.8 3.1

Source: Haver Analytics, China National Bureau of Statistics, and FRB staff estimates

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Slide 17: China at a Crossroads: Risks, Massive credit boom, fueled increasingly by nontraditional credit

Credit*

12-month percent change
Dates (monthly) Total Credit Growth* )
3-Jan 18
3-Feb 18.99
3-Mar 19.38
3-Apr 20.32
3-May 20.95
3-Jun 23.19
3-Jul 23.19
3-Aug 24.12
3-Sep 24.16
3-Oct 24.1
3-Nov 23.74
3-Dec 22.92
4-Jan 21.58
4-Feb 20.87
4-Mar 22.09
4-Apr 21.72
4-May 21.06
4-Jun 18.93
4-Jul 18.21
4-Aug 16.72
4-Sep 15.97
4-Oct 15.38
4-Nov 15.35
4-Dec 15.86
5-Jan 16.32
5-Feb 16.33
5-Mar 14.61
5-Apr 13.89
5-May 13.49
5-Jun 14.18
5-Jul 14.05
5-Aug 14.22
5-Sep 15.72
5-Oct 14.98
5-Nov 15.13
5-Dec 14.47
6-Jan 15.33
6-Feb 15.48
6-Mar 16.75
6-Apr 17.04
6-May 17.64
6-Jun 17.01
6-Jul 17.65
6-Aug 18.06
6-Sep 16.49
6-Oct 17.4
6-Nov 17.49
6-Dec 18
7-Jan 17.57
7-Feb 17.76
7-Mar 16.86
7-Apr 17.56
7-May 17.25
7-Jun 18.43
7-Jul 18.59
7-Aug 19.75
7-Sep 20.39
7-Oct 21.26
7-Nov 21.13
7-Dec 21.05
8-Jan 21.86
8-Feb 22.09
8-Mar 21.73
8-Apr 21.51
8-May 21.83
8-Jun 21.16
8-Jul 21.59
8-Aug 20.42
8-Sep 20.22
8-Oct 19.15
8-Nov 19.35
8-Dec 20.22
9-Jan 20.46
9-Feb 21.96
9-Mar 25.91
9-Apr 25.21
9-May 27.49
9-Jun 31.27
9-Jul 31.48
9-Aug 31.95
9-Sep 33.03
9-Oct 33.78
9-Nov 34.5
9-Dec 33.68
10-Jan 34.37
10-Feb 33.5
10-Mar 30.18
10-Apr 31.82
10-May 29.93
10-Jun 26.43
10-Jul 26.01
10-Aug 26.29
10-Sep 25.59
10-Oct 25.62
10-Nov 25.33
10-Dec 25.38
11-Jan 24.06
11-Feb 22.93
11-Mar 23.16
11-Apr 22.51
11-May 22.21
11-Jun 21.81
11-Jul 21.32
11-Aug 21
11-Sep 19.52
11-Oct 19.11
11-Nov 18.59
11-Dec 18.48
12-Jan 17.03
12-Feb 17.51
12-Mar 17.15
12-Apr 16.4
12-May 16.29
12-Jun 16.93
12-Jul 17.52
12-Aug 17.42
12-Sep 18.93
12-Oct 19.26
12-Nov 19.14
12-Dec 19.17
13-Jan 20.91
13-Feb 20.68
13-Mar 21.09
13-Apr 21.92
13-May 21.73
13-Jun 20.45
13-Jul 19.83
13-Aug 19.94
13-Sep 19.33
13-Oct 18.66
13-Nov 18.49
13-Dec 17.72
14-Jan 17.44
14-Feb 17.1
14-Mar 16.31
14-Apr 15.91
14-May 15.97
14-Jun 16.73
14-Jul 16.07
14-Aug 15.26
14-Sep 14.79
14-Oct 14.45
14-Nov 14.15
14-Dec 14.35
15-Jan 13.63
15-Feb 13.82
15-Mar 12.96
15-Apr 12.47
15-May 12.33
15-Jun 12.52
15-Jul 13.16
15-Aug 13.43
15-Sep 13.81
15-Oct 13.96
15-Nov 14.25
15-Dec 14.25
16-Jan 15.18
16-Feb 14.73
16-Mar 16.1
16-Apr 16.57
16-May 16.28
16-Jun 16.12
16-Jul 15.58
16-Aug 15.9
16-Sep 15.78
16-Oct 15.85
16-Nov 15.92
16-Dec 15.56
17-Jan 15.48
17-Feb 15.39
17-Mar 14.8
17-Apr 14.56
17-May 14.68
17-Jun 14.24
17-Jul 14.81
17-Aug N/A
17-Sep N/A
17-Oct N/A
17-Nov N/A
17-Dec N/A

*Total credit includes off-balance-sheet financing, trust loans, and net corporate debt/equity issuance

Source: Haver Analytics, FRB staff estimates

Dates (quarterly)   Bank Credit (Percent of GDP) Total credit* (Percent of GDP)
2003 Q1 119.13 119.13
2003 Q2 125.07 125.07
2003 Q3 126.81 126.81
2003 Q4 127.52 127.52
2004 Q1 126.18 126.18
2004 Q2 125.3 125.3
2004 Q3 123.89 123.89
2004 Q4 125.19 125.19
2005 Q1 123.86 123.86
2005 Q2 123.98 123.98
2005 Q3 124.69 124.69
2005 Q4 123.64 123.64
2006 Q1 124.34 124.34
2006 Q2 123.81 123.81
2006 Q3 124.38 124.38
2006 Q4 123.67 123.67
2007 Q1 119.47 119.47
2007 Q2 119.52 119.52
2007 Q3 120.82 120.82
2007 Q4 120.89 120.89
2008 Q1 119.49 119.49
2008 Q2 119.33 119.33
2008 Q3 122.51 122.51
2008 Q4 128.83 128.83
2009 Q1 140.7 140.7
2009 Q2 146.45 146.94
2009 Q3 149.1 149.67
2009 Q4 150.88 151.42
2010 Q1 154.06 154.57
2010 Q2 156.08 156.69
2010 Q3 158.51 159.39
2010 Q4 159.5 160.41
2011 Q1 158.45 159.32
2011 Q2 158.37 159.2
2011 Q3 158.46 159.54
2011 Q4 163.14 164.32
2012 Q1 164.8 165.96
2012 Q2 167.04 168.24
2012 Q3 172.38 173.93
2012 Q4 176.63 178.15
2013 Q1 180.42 181.9
2013 Q2 183.52 185.08
2013 Q3 186.45 188.33
2013 Q4 188.01 189.96
2014 Q1 192.89 194.81
2014 Q2 196.68 198.79
2014 Q3 197.04 199.49
2014 Q4 199.94 202.36
2015 Q1 202.31 204.69
2015 Q2 204.16 207.76
2015 Q3 207.04 212.88
2015 Q4 209.52 217.24
2016 Q1 213.11 222.02
2016 Q2 212.75 225.03
2016 Q3 214.45 228.51
2016 Q4 214.23 229.1
2017 Q1 213.11 228.02
2017 Q2 215.01 231.37
2017 Q3 N/A N/A
2017 Q4 N/A N/A

*Total credit includes off-balance-sheet financing, trust loans, and net corporate debt/equity issuance

Source: Haver Analytics, FRB staff estimates

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Slide 18: China at a Crossroads: Challenges, Slowing potential growth but partly a result of catching up

Growth vs. Per Capita GDP

Country Decade Real GDP Growth (Percent) Per Capita GDP (Thousands of 2005 USD)
China 1980s 9.741004 1.791018
China 1990s 9.998738 2.786098
China 2000s 10.29316 5.258925
China 2010-2015 8.33 8.528865
China 2016 6.7 10.39657
Japan 1950s 7.385968 2.656365
Japan 1960s 10.62607 5.957524
Japan 1970s 7.836466 14.16543
Japan 1980s 4.368439 17.88893
Japan 1990s 1.469595 27.75284
Japan 2000s 0.556755 30.39231
Japan 2010-2016 1.44 30.90352
Korea 1970s 10.08323 3.450362
Korea 1980s 8.623488 6.504422
Korea 1990s 6.677672 15.03324
Korea 2000s 4.42026 23.36197
Korea 2010-2016 3.48 27.87851

Source: Haver Analytics, Penn World Tables, and FRB Staff Estimates

Curve fitted using annual data for the three countries

Trend in Real GDP Growth (%) Trend in Per Capita GDP (thousands of 2005 USD)
9.452238 1.903567
9.446858 2.156097
9.43385 2.451448
9.405451 2.95316
9.385843 3.260206
9.361713 3.644843
9.331362 4.092112
9.310308 4.401252
9.286684 4.762675
9.27932 4.878262
9.314404 4.340126
9.299194 4.56942
9.280814 4.854778
9.234568 5.379997
9.178742 5.850807
9.126229 6.166071
8.963062 7.072121
8.787044 8.04239
8.602589 9.045442
8.466146 9.723072
8.256223 10.67881
7.962988 11.75984
7.697193 12.52372
7.281515 13.5023
6.695986 14.86267
5.993154 16.32536
5.615725 17.16708
5.323577 17.89296
5.644022 17.10089
5.081054 18.51874
4.60306 19.59882
4.327154 20.25951
3.820328 21.81015
3.639139 22.48154
3.404128 23.40106
3.248685 24.04758
3.060075 24.84995
2.805658 25.96484
2.902034 25.55067
2.878089 25.6556
2.519035 27.23008
2.450429 27.5223
2.388353 27.83554
2.18043 28.93158
2.0576 29.55181
1.98032 29.98798
1.871231 30.64867
1.809641 31.0481
1.713086 31.68324

Source: Haver Analytics, Penn World Tables, and FRB Staff Estimates

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Slide 19: China at a Crossroads: Challenges, Slowing potential: Headwinds from demographic changes

Demographic Trends

Date (decades) Dependency ratio (Percent) 15-64 year olds (millions) 65+ year olds (millions)
1980 7.58 579.96 43.94
1985 7.9 673.79 53.24
1990 8.12 759.92 61.68
1995 8.82 814.59 71.84
2000 9.74 867.19 84.46
2005 10.35 945.5 97.82
2010 11.09 996.86 110.58
2015 13.05 1007.5 131.43
2020 17.08 993.1 169.61
2025 20.38 984.21 200.6
2030 25.26 962.63 243.17
2035 32.66 916.31 299.29
2040 39.6 866 342.92

*65+ as share of adult population

Source: UN World Population Prospects

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Slide 20: China Slowdown: Global Effects, FRB SIGMA Model + VAR results to quantify effects of China shock
  • Some key features of SIGMA:
    • Open economy, GE model
    • Monetary policy follows Taylor rule (but with ZLB constraint)
  • SIGMA consists of three blocks, calibrated to the U.S. economy,advanced foreign economies (AFEs), and EMEs
  • To quantify China slowdown effects, need effect on other EMEs
    • Use VAR results to characterize spillovers through "standard" (mainlytrade) channels = 1/2 the China response

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Slide 21: China Slowdown: Global Effects, Three scenarios examined
  • Scenario 1: Moderate China slowdown with “standard trade” spillovers
  • Scenario 2: China crisis also with “standard trade” spillovers:
  • Scenario 3: China crisis with "extra financial" spillovers
    • Other EME response 1-to-1, rather than 1/2

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Slide 22: China Slowdown: Global Effects, China crisis would hit EMEs and AFEs hard; significant U.S. effect too

Real GDP, Level. A. China (Percent Deviation from Baseline)

Date (quarterly) Moderate China Slowdown China Crisis with "Standard Trade Spillovers" China Crisis with "Extra Financial Spillovers"
2017:02 -0.7 -1.37 -1.51
2017:03 -1.71 -3.37 -3.57
2017:04 -2.66 -5.24 -5.42
2018:01 -3.29 -6.48 -6.57
2018:02 -3.64 -7.17 -7.17
2018:03 -3.77 -7.46 -7.38
2018:04 -3.76 -7.46 -7.31
2019:01 -3.63 -7.24 -7.05
2019:02 -3.43 -6.89 -6.67
2019:03 -3.2 -6.46 -6.22
2019:04 -2.96 -6 -5.75
2020:01 -2.72 -5.54 -5.27
2020:02 -2.49 -5.09 -4.82
2020:03 -2.28 -4.67 -4.39
2020:04 -2.09 -4.28 -4

Source: FRB Staff Calculations

Real GDP, Level, B. Emerging Market Economies (Percent Deviation from Baseline)

Date (quarterly) Moderate China Slowdown China Crisis with "Standard Trade Spillovers" China Crisis with "Extra Financial Spillovers"
2017:02 -0.41 -0.81 -1.51
2017:03 -1.01 -1.98 -3.57
2017:04 -1.57 -3.09 -5.42
2018:01 -1.94 -3.81 -6.57
2018:02 -2.14 -4.22 -7.17
2018:03 -2.22 -4.4 -7.38
2018:04 -2.21 -4.39 -7.31
2019:01 -2.14 -4.26 -7.05
2019:02 -2.02 -4.06 -6.67
2019:03 -1.88 -3.81 -6.22
2019:04 -1.74 -3.54 -5.75
2020:01 -1.6 -3.26 -5.27
2020:02 -1.47 -3 -4.82
2020:03 -1.34 -2.75 -4.39
2020:04 -1.23 -2.52 -4

Source: FRB Staff Calculations

Real GDP, Level. C. Advanced Foreign Economies (Percent Deviation from Baseline)

Date (quarterly) Moderate China Slowdown China Crisis with "Standard Trade Spillovers" China Crisis with "Extra Financial Spillovers"
2017:02 -0.08 -0.18 -0.27
2017:03 -0.23 -0.66 -0.94
2017:04 -0.41 -1.43 -2.16
2018:01 -0.57 -2.22 -3.46
2018:02 -0.69 -2.87 -4.52
2018:03 -0.76 -3.34 -5.29
2018:04 -0.78 -3.63 -5.78
2019:01 -0.76 -3.76 -6.01
2019:02 -0.72 -3.76 -6.02
2019:03 -0.66 -3.65 -5.86
2019:04 -0.6 -3.46 -5.57
2020:01 -0.52 -3.21 -5.18
2020:02 -0.46 -2.93 -4.73
2020:03 -0.39 -2.63 -4.26
2020:04 -0.33 -2.34 -3.78

Source: FRB Staff Calculations

Real GDP, Level. D. United States (Percent Deviation from Baseline)

Date (quarterly) Moderate China Slowdown China Crisis with "Standard Trade Spillovers" China Crisis with "Extra Financial Spillovers"
2017:02 -0.05 -0.1 -0.21
2017:03 -0.14 -0.29 -0.62
2017:04 -0.24 -0.52 -1.14
2018:01 -0.32 -0.71 -1.6
2018:02 -0.38 -0.86 -1.95
2018:03 -0.41 -0.96 -2.2
2018:04 -0.42 -1.01 -2.35
2019:01 -0.41 -1.01 -2.42
2019:02 -0.39 -0.99 -2.44
2019:03 -0.36 -0.94 -2.4
2019:04 -0.32 -0.87 -2.33
2020:01 -0.29 -0.79 -2.23
2020:02 -0.25 -0.71 -2.12
2020:03 -0.21 -0.62 -1.99
2020:04 -0.18 -0.54 -1.87

Source: FRB Staff Calculations

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Slide 23: China Slowdown: Global Effects, AFE effects bigger now—more limited scope for monetary policy

A. China (Percent Deviation from Baseline)

Date (quarterly) China Crisis with "Standard Trade Spillovers" China Crisis with "Standard Trade" Spillovers and no ZLB
2017:02 -1.37 -1.29
2017:03 -3.37 -2.95
2017:04 -5.24 -4.43
2018:01 -6.48 -5.34
2018:02 -7.17 -5.8
2018:03 -7.46 -5.95
2018:04 -7.46 -5.89
2019:01 -7.24 -5.69
2019:02 -6.89 -5.42
2019:03 -6.46 -5.1
2019:04 -6 -4.76
2020:01 -5.54 -4.41
2020:02 -5.09 -4.08
2020:03 -4.67 -3.77
2020:04 -4.28 -3.49

Source: FRB Staff Calculations

B. Emerging Market Economies (Percent Deviation from Baseline)

Date (quarterly) China Crisis with "Standard Trade Spillovers" China Crisis with "Standard Trade" Spillovers and no ZLB
2017:02 -0.81 -0.76
2017:03 -1.98 -1.74
2017:04 -3.09 -2.61
2018:01 -3.81 -3.15
2018:02 -4.22 -3.41
2018:03 -4.4 -3.5
2018:04 -4.39 -3.47
2019:01 -4.26 -3.35
2019:02 -4.06 -3.19
2019:03 -3.81 -3
2019:04 -3.54 -2.8
2020:01 -3.26 -2.6
2020:02 -3 -2.4
2020:03 -2.75 -2.22
2020:04 -2.52 -2.06

Source: FRB Staff Calculations

C. Advanced Foreign Economies (Percent Deviation from Baseline)

Date (quarterly) China Crisis with "Standard Trade Spillovers" China Crisis with "Standard Trade" Spillovers and no ZLB
2017:02 -0.18 -0.12
2017:03 -0.66 -0.33
2017:04 -1.43 -0.57
2018:01 -2.22 -0.78
2018:02 -2.87 -0.92
2018:03 -3.34 -1.01
2018:04 -3.63 -1.03
2019:01 -3.76 -1.01
2019:02 -3.76 -0.95
2019:03 -3.65 -0.88
2019:04 -3.46 -0.79
2020:01 -3.21 -0.7
2020:02 -2.93 -0.61
2020:03 -2.63 -0.53
2020:04 -2.34 -0.45

Source: FRB Staff Calculations

D. United States (Percent Deviation from Baseline)

Date (quarterly) China Crisis with "Standard Trade Spillovers" China Crisis with "Standard Trade" Spillovers and no ZLB
2017:02 -0.1 -0.09
2017:03 -0.29 -0.24
2017:04 -0.52 -0.42
2018:01 -0.71 -0.57
2018:02 -0.86 -0.67
2018:03 -0.96 -0.73
2018:04 -1.01 -0.75
2019:01 -1.01 -0.73
2019:02 -0.99 -0.69
2019:03 -0.94 -0.64
2019:04 -0.87 -0.58
2020:01 -0.79 -0.52
2020:02 -0.71 -0.45
2020:03 -0.62 -0.4
2020:04 -0.54 -0.34

Source: FRB Staff Calculations

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Slide 24: China: Reducing Vulnerabilities
  • Policies to reduce economy's saving rate:
    • Increased social sector spending to reduce householdprecautionary savings
    • More dividend payouts by SOEs to reduce business savings
  • Reinvigorate the private sector as an engine of growth
    • Reforms of SOEs are crucial
  • Continue progress toward exchange rate flexibility

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Last Update: September 28, 2017